1
INTRODUCTION
Central bank digital currencies, or CBDCs, are on the rise. In an attempt to
reinvent money as we know it, central bankers and other policymakers
around the world are currently researching, developing, and launching
CBDCs.
However, there should be no misunderstanding: efforts in the
United States and abroad are little more than a bid to solidify government
control over money and payments.
That should be no surprise considering that the rise of CBDCs began
after the rise of cryptocurrency. In fact, as this book will later discuss, it was
the announcement by Meta (formerly known as Facebook) of its
cryptocurrency Libra in the summer of 2019 that sent government officials
into a frenzy. Panicked, many officials latched on to the idea that the
government needed to launch its own version of cryptocurrency.
Yet a CBDC is not a cryptocurrency at all. In fact, in almost all the
characteristics that really matter, CBDCs are nearly the opposite of
cryptocurrencies (Table 1.1). Where Bitcoin was developed to be a
decentralized system provided by the market, a CBDC would be a
centralized system controlled by the government. Where Bitcoin is open
and permissionless, a CBDC would be closed and permissioned. Where
Bitcoin has clear rules and limits, a CBDC would be left to the discretion of
the government.
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